delusionofgrandeur

The US Federal Reserve has cut interest rates for the second time in just over a week with the apparent intent of staving off a recession. 9 days ago, they cut from 4.75% down to 4% and many at the time said the move smacked of desperation. They have now cut again by 50 basis points to 3.5% and it is looking increasingly unlikely that their efforts will have any positive effect.

They may actually have a negative effect if the markets start to get the jitters based on the notion that the Federal Reserve is losing their ability to influence the stock markets. After a brief rall upon the news, the Dow Jones and the NASDAQ have both taken a noticeable dives again.

This will hurt the US Dollar and as a consequence, hurt US savers who will be seeing the value of their money diminishing and their interest payments shrinking. The Federal Reserve appears to be trying to buy their way out of a mess by paying with the US citizen’s savings.

Photo Credit: Dan Smith cc-by-sa-2.5

This entry was posted on Wednesday, January 30th, 2008 at 10:18 pm and is filed under Economy, News, Politics.You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.